©Kari Sipilä 1 Kari Sipilä Executive Director, D.Sc.(Tech.)h.c. Future Innovations Past President of LES Scandinavia Espoo, Finland CREATIVE INDUSTRIES, INTELLECTUAL PROPERTY, VALUE AND ITS CREATION ST. PETERSBURG MARCH 2013

©Kari Sipilä 2 INTELLECTUAL CAPITAL IN AN ORGANIZATION PERSONS ORGANIZATION PARTNERS, NETWORK -

©Kari Sipilä Sipilä INTELLECTUAL PROPERTY GIVES LARGE POSSIBILITIES FOR BUSINESS Intellectual Property often together with Research and Development work offer large possibilities for business, based on: Patent ( like technical solution ) Trademark, brand ( like symbol, name ) Copyright ( like art, software ) Know-how, trade secrets ( like confidential ) Business method ( the whole business or parts of it like processes, research and development, testing, materials, logistics, e-business, B2B and B2C, formats, etc.) Different combinations give a stronger protection! 3

©Kari Sipilä Sipilä COPYRIGHT A copyright is a form of intellectual property law which protects original works of authorship including literary, dramatic, musical, and artistic works such as poetry, novels, movies, songs, computer software and architecture. Copyright law does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed. Your work is under copyright protection the moment it is created and fixed in a tangible form so that it is perceptible either directly or with the aid of a machine or device. The moment you write it, paint it, or put it on the internet, your work is copyright protected. Source: About.com Guide 4

©Kari Sipilä VALUE CHAIN FROM IDEAS INTO PRODUCTS ON THE MARKET COMMERZIALI- SATION, MARKETING PRODUCT DEVELOPMENT PATENTING, IPR IDEA EVALUATION, PLANNING General information on inventions and its development Inventiing thwe invention Innovation project Ownership Market pull Novelty and inventiveness Technical features Business opportunities Business plan 1 IPR strategy Domestic and international patents and other IPR Legal aid Patent attorney Technical Productive Commercial Prototypes Design Market research Business plan 2 Marketing communications The Invention markets in Internet Licensing New company Internationalization

CREATIVE INDUSTRIES CREATIVE INDUSTRIES GENERATE OR EXPLOIT KNOWLEDGE AND INFORMATION, LIKE IN ARCHITECTURE ART, CRAFTS DESIGN FASHION FILM, TV, RADIO, VIDEO GAMES MUSIC, PERFORMING ARTS PUBLISHING RESEARCH AND DEVELOPMENT SOFTWARE, ETC. ©Kari Sipilä 6

ORGANISATIONS IN CREATIVE INDUSTRIES CREATIVE ORGANISATIONS IN ALL NORDIC COUNTRIES (PERMANENT OR PROJECTS) NORDIC UNIVERSITIES INNOVATION SUPPORT ORGANISATIONS HELSINKI DESIGN LAB, FINLAND HELSINKI DESIGN CAPITAL 2012, FINLAND NORDEN, NORDIC INNOVATION, KREANORD GENERATOR SWEDISH CREATIVE INDUSTRIES, SWEDEN CCEE – THE CENTER FOR CULTURE AND EXPERIENCE ECONOMY, DENMARK COMPANIES SEE MORE ON RESPECTIVE WEBSITES ©Kari Sipilä 7

CURRENT TRENDS IN CREATIVE INDUSTRIES THE FUTURE OF CREATIVE INDUSTRIES AND HOW IT IS VALUED AND APPRECIATED ( NICE OR MONEY? ) RESPECT FOR CREATORS WORK AND RIGHTS NEW INNOVATIONS AND R&D DIGITAL ENVIRONMENT AND ECONOMY TV, FILM, PHOTO AND DIGITAL DISTRIBUTION PLATFORMS GAMES BUSINESS OF E-BOOKS: CREATORS, PUBLISHERS, PLATFORMS, CONSUMERS INTELLECTUAL PROPERTY, ESPECIALLY COPYRIGHT AND THE ACTIVITIES FROM POLICY MAKERS LICENSING, OPEN SOURCE, ANTI-PIRACY MANAGEMENT OF INTELLECTUAL PROPERTY ©Kari Sipilä 8

REVENUE POSSIBILITIES 1. REVENUES OR OPEN ACCESS 2. REVENUE POSSIBILITIES 2.1 DIRECT SALE 2.2 BASED ON AGREEMENTS LICENCE AND ROYALTIES FEE BASED PAYMENT ADVANCE AND OTHER PARTIAL PAYMENTS OTHER REVENUES FROM » TRANSLATIONS » E-DELIVERY OR E-BOOKS » FILM, TV, RADIO, DVD, PHOTOS, ETC. » MERCHANDISING 2.3 PUBLIC DEVELOPMENT OR SUPPORT FUNDS ©Kari Sipilä 9

ANGRY BIRDS World famous game from Finland,

WHY FAILURES IN INVENTIONS? Too high expectations The inventions do not meet commercial need, no company or customer interest The inventor is not a businessman Problems in patenting or other IPR Problems in technology or production Funding or capital problems Not better than the competors, tough competition Licensing efforts do not succeed Missing cooperation, team or management Good business requires strong internationalisation ©Kari Sipilä 11

©Kari Sipilä 12 RESULTS FROM INNOVATION ACTIVITIES IN INDUSTRY, UNIVERSITIES AND RESEARCH CENTERS Successful innovations for domestic and international businesses Entrepreneurs and new companies to new locations to strengthen regional activities Additional knowledge and quality to universities and research centers (also for teaching and further research) as well as to researchers and companies Economic results to participants and university Possibility for specialization and concentration in niche areas Possibilities for further research, collaboration, innovation, and internationalisation

VALUE CHAIN Creator or inventor and his/her workDifferent forms of businessCustomers internationally ©Kari Sipilä 13

VALUATION VALUATION IS THE ACTION OF ESTIMATING OR FIXING THE MONETARY OR OTHER VALUE OF SOMETHING, FOR INSTANCE AN INVENTION OR THE INTELLECTUAL PROPERTY, USUALLY BY A PROFESSIONAL EVALUATOR. Source: Weston Anston 2005 ©Kari Sipilä 14

VALUE OF AN INNOVATION AN INVENTION OR AN INNOVATION HAS VALUE FOR THE INVENTOR(S) FOR THE COMPANIES AND BUSINESS FOR THE SOCIETY FOR THE CONSUMERS, ETC. THESE VALUES ARE OFTEN DIFFERENT ©Kari Sipilä 15

REASONS TO CALCULATE OR ESTIMATE THE VALUE SELLING OR BUYING LICENCES PRICING THE PRODUCT VALUE OF IP AND THE COMPANY VALUE FOR ACCOUNTING TAXATION AND TRANSFER PRICING REMUNERATION TO INVENTORS AND R&D MERGERS AND BUSINESS DEALS, DUE DILIGENCE LITIGATION BANKRUPTCY ETC. ©Kari Sipilä 16

FACTORS INFLUENCING TO THE VALUE MANY FACTORS INFLUENCE TO THE VALUE: QUALITY OF THE PATENT OR OTHER INTELLECTUAL PROPERTY DEVELOPMENT PHASE AND TIME RESOURCES COMPETITION AND GLOBALISATION DEVELOPMENT OF THE FIELD IN THE FUTURE PURPOSE OF THE VALUATION VALUATION METHOD, ETC. THE REAL VALUE CAN BE SEEN IN REAL BUSINESS ©Kari Sipilä 17

VALUE CHANGES DURING THE PROJECT LIFE SPAN Value in the early phase of the projectValue in the early commercialisation phaseValue in the successful business ©Kari Sipilä 18

MANY VALUATION TECHNIQUES COST APPROACH INCOME APPROACH ( NET PRESENT VALUE ) MARKET APPROACH ALSO SEVERAL OTHER TECHNIQUES ©Kari Sipilä 19

ESTIMATED VALUE IS OFTEN A COMBINATION OF DIFFERENT VALUATIONS Estimated value Valuation 1 Valuation 2 Valuation 3 ©Kari Sipilä 20

EXAMPLE OF A PRODUCT PRICING, LICENSING CASE MANUFACTURING PRICE = 20 EUROS MANUFACTURERS SELLING PRICE = 60 EUROS, HIS GROSS PROFIT IS 40 EUROS ROYALTIES TO THE INVENTOR 5% of 60 EUROS = 3.00 EUROS RETAILERS SHARE = 37,00 EUROS PRODUCT PRICE = 100 EUROS Source Robert Goldscheider, ©Kari Sipilä 21

EXAMPLES OF THE PRICES BASED ON INTELLECTUAL PROPERTY CASE 1: PATENT APPLIED, PCT PHASE, R&D CONTINUES PRICE BASED ON COSTS AND POSSIBLE FUTURE VALUE: EUROS CASE 2: MUSIC PIECE BASED ON COPYRIGHT ANNUAL REVENUES TO THE COMPOSER BASED ON AGREEMENTS 5000 EUROS CASE 3: PATENT GRANTED, SOME PRODUCTS SOLD PRICE BASED ON OTHER PRODUCTS OF THE BUYER: EUROS CASE 4: COMPANY SOLD, OVER 50 INTERNATIONAL PATENTS GRANTED, SUCCESSFUL BUSINESS BASED ON PATENTED PRODUCTS PRICE BASED ON GREAT PATENTS AND PRODUCTS: 260 MILLION EUROS ©Kari Sipilä 22

©Kari Sipilä THANK YOU! Kari Sipilä, Helsinki / Espoo, Finland Tel